US Debt: Are cryptos trapped by the debt ceiling?

As the United States faces the risk of defaulting on its debt, urgent actions are needed. One of them is to raise the debt ceiling. Some politicians, particularly Republicans, would like negotiations in this regard to take into account the interests of crypto firms. But for President Biden, that’s a no-go!

No agreement on the debt ceiling that benefits the crypto industry in sight

American President Joe Biden does not envision an agreement on the debt ceiling that would favor crypto firms. The US leader made this clear while speaking on the matter at a press conference. This position aligns with the president’s budgetary goals for the coming year.

“I’m not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistance at risk for nearly a hundred — excuse me — nearly 1 million Americans,” stated the statesman.

Republican leaders and the White House are at odds about crypto tax-loss harvesting during debt ceiling negotiations. https://t.co/gA8y1ppe3R

— Cointelegraph (@Cointelegraph) May 21, 2023

It must be said that the statements of the Democratic president come in a very specific context. They are obviously related to the Biden administration’s budget plan for 2024. In accordance with this plan, the government aims to reduce the budget deficit by nearly $3 trillion.

This state policy will be implemented over several years with the aim of addressing debt problems. It is in these circumstances that negotiations are being held with Congress. The objective is to obtain an agreement to raise the debt ceiling.

Economic threats on the horizon?

Several observers believe that such a project would greatly harm the crypto industry. This is because the plan in question specifically targets the elimination of tax losses on crypto companies.

This operation, which could generate around $24 billion in tax revenue, is not feasible for many Republican lawmakers. The negotiations on this matter with the White House are currently at a standstill. For example, Republican representative Kevin McCarthy believes that the increase in US debt is a “spending problem, not a revenue problem.”

The government, on the other hand, sees it differently and tries to absolve itself of blame. It notably accuses previous administrations of significantly affecting public revenues through widespread tax cuts.

At the moment, there is a deadlock and a significant economic urgency is being ignored. If the debt ceiling is not raised, America could default on its debt as early as June 1st. This would be a disastrous prospect for a country that is already experiencing a decline in its currency’s value.